What Happens If I Sell My House?

As discussed elsewhere on this site, all insurance contracts require an insurable interest, and all of them contain a promise to pay benefits when the insurable interest is damaged or lost. A question that frequently comes up for insureds is whether they still have a right to pursue an insurance claim if, after the loss, they sell the damaged property. In California, the answer is yes. Insurance Code section 301 confirms it.

This is very important for the insured to know. In certain situations, insureds may find it desirable to sell their damaged property before the claim is resolved -- such as when an insurer is dragging out payment. The downside, of course, is that the property will not fetch as much value in its damaged state. But under Insurance Code section 301, these insureds retain the right to pursue the claim even after the property sells, and thus recover more money.

Many insureds transfer ownership of property without considering how insurance will be affected. It is important for insureds to understand their insurable interest in their property and understand their rights with respect to insurance claims even after the transfer of that interest.